In September,Sherry's Shoe Mart ordered women's boots from a supplier.The boots were delivered in October,paid for in November,and sold in December.If Sherry uses accrual-based accounting,in which month should she report the boots under Cost of goods sold?

Question

Quizplus · Accepted Answer

Under accrual-based accounting, expenses are recorded when they are incurred, not necessarily when they are paid. The boots should be reported under Cost of Goods Sold in December, the month they were sold, as this is when the expense is incurred in terms of the matching principle, matching expenses with the revenues they generate.

In September,Sherry's Shoe Mart Ordered Women's Boots from a Supplier